Congress Targets the NCAA
The Chair of the House Ways and Means Committee, the tax writing arm of the House of Representatives has taken direct aim at the tax exemption enjoyed by the NCAA and college athletics in general. In a letter sent to Myles Brand, President of the NCAA, Representative Bill Thomas R-CA, asked Brand to justify the association's tax exempt status in light of its lucrative contract to televise the men's basketball tournament as well as the activities conducted by member institutions.
Rep. Thomas points to multimillion dollar broadcast contracts, coaches' escalating salaries, the increase in corporate sponsorships and the facilities arms race and questions whether colleges and universities deserve to continue to receive tax exempt status for their athletic operations. One question posed by Rep. Thomas frames the issue rather succinctly:
The likely next step in this drama is a series of House committee hearings on the state of major college athletics. Will they be entertaining? No doubt - it will be fun to watch Myles Brand squirm as he tries to justify his salary of some $850,000 and the ridiculous sums that coaches are being paid. Questions about the addition of the twelfth football game will be interesting.
Nevertheless, it will be all show and major change is unlikely without a new scandal erupting that goads Congress into action. Division I schools with big football and basketball programs have have too many friends in high places to truly be scared of real action out of Rep. Thomas. The wholesale loss of the exemption is unlikely but change at the margins is possible. Congress could remove the deductibility of sky boxes. force financial aid decisions out of the hands of coaches, and demand that admission decisions be free of athletic department influence.
In the end, how the NCAA and its members justify the high profile programs will be the key to just far the House is able to carry this campaign. Continuing to justify them by asserting that the football and basketball programs attract donors and potential students to the university doesn't really work for federal tax policy purposes, as neither of those reasons is truly related to accomplishment of the educational purpose of the university. Both of those are directly tied to the production of the income. That said, however, it will ultimately be as all things are in Washington, a political decision, and in those, the NCAA and its members, usually get their way.
Rep. Thomas points to multimillion dollar broadcast contracts, coaches' escalating salaries, the increase in corporate sponsorships and the facilities arms race and questions whether colleges and universities deserve to continue to receive tax exempt status for their athletic operations. One question posed by Rep. Thomas frames the issue rather succinctly:
"How does playing major college football or men's basketball in a highly commercialized, profit-seeking, entertainment environment further the educational purpose of your member institution?"The NCAA should treat this letter seriously as Congress is concerned about the direction of major college athletics.
The likely next step in this drama is a series of House committee hearings on the state of major college athletics. Will they be entertaining? No doubt - it will be fun to watch Myles Brand squirm as he tries to justify his salary of some $850,000 and the ridiculous sums that coaches are being paid. Questions about the addition of the twelfth football game will be interesting.
Nevertheless, it will be all show and major change is unlikely without a new scandal erupting that goads Congress into action. Division I schools with big football and basketball programs have have too many friends in high places to truly be scared of real action out of Rep. Thomas. The wholesale loss of the exemption is unlikely but change at the margins is possible. Congress could remove the deductibility of sky boxes. force financial aid decisions out of the hands of coaches, and demand that admission decisions be free of athletic department influence.
In the end, how the NCAA and its members justify the high profile programs will be the key to just far the House is able to carry this campaign. Continuing to justify them by asserting that the football and basketball programs attract donors and potential students to the university doesn't really work for federal tax policy purposes, as neither of those reasons is truly related to accomplishment of the educational purpose of the university. Both of those are directly tied to the production of the income. That said, however, it will ultimately be as all things are in Washington, a political decision, and in those, the NCAA and its members, usually get their way.
Labels: college basketball, college football, Congress, Myles Brand, NCAA, sports, taxes, Ways and Means
posted by Mark at 5:22 PM
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